A

ABA Number – Also referred to as a routing number, an ABA number is a nine-digit number used by banks to identify a specific financial institution. The number is used on checks and ACH transactions so that they can be routed through the banking system to the proper institution.

Accepted – The transaction has been submitted to a financial institution for processing.

ACH – An acronym used to identify the Automated Clearing House Network.

ACH Authorization – Agreement by a receiver to allow an ACH debit or credit entry to their account. Authorizations for credit may be oral, but debit transactions must be authorized in writing.

ACH Network– Funds transfer system governed by the rules of the National Automated Clearing House Association (NACHA), which provides for the interbank clearing of electronic entries for participating financial institutions.

ACH Operator – organizations that process transactions between the originator and receiver. The Federal Reserve Bank and Electronic Payments Network (EPN) are currently the only two ACH operators.

ACH Processing – The moving of money electronically by transmitting electronic data transactions using the Federal Reserve Banking system, transferring money between merchant and customer’s checking accounts.

ACH Processor – A Company or organization that processes ACH transactions. ACHQ™ is a processor of ACH transactions.

Acquirer – A financial institution or Merchant Service Provider (MSP) that facilitates and manages credit card processing on behalf of a merchant customer.

Acquirer Bank – The bank or financial institution that holds the merchant’s bank account that is used for collecting the proceeds for credit card processing.

Acquiring Processor – Credit card processing entity with which an acquirer partners in order to provide merchants with transaction clearing, settlement, billing and reporting services.

Addenda Record – ACH record type that carries supplemental data needed to completely identify an account holder or provide information concerning a payment to the RDFI or receiver.

Affidavit – Sworn statement by a consumer declaring that a particular ACH transaction was authorized or that the authorization, for that transaction, will be or has been revoked.

Agreement – A contract between the merchant and ACHQ™ that defines the operational and legal relationship between the two entities when transferring funds electronically through the ACH.

Agreement Date – The date upon which a transaction is authorized by the customer to take place.

Authentication – A critical data security technique used to prevent the alteration of data as the data are exchanged between the participants in an ACH transaction.

Auto Recurring Transactions – Recurring transactions that are set to occur automatically.

B

Bank Holiday – A national holiday in which a financial institution is closed for business and therefore not processing ACH transactions.

Batch Processing – A method of data processing and data communications transmission in which related transactions are grouped together and transmitted for processing collectively.

Batch Upload – A means of submitting multiple transactions at one time rather than entering transactions independently.

Business Day – A day in which a financial institution is open and performing ACH and payment processing transaction.


C

Check Conversion – The process of converting a paper check into an ACH debit for payment.

Check Verification – The process of verifying a checking account for a history of issuing bad checks by comparing their account and identity information to a negative database.

Clearing House – An association of depository institutions that facilitates the exchange or clearing of checks and electronic items among its members.

Credit – The deposit of funds into an account.


D

Data Encryption – A process in which sensitive data is scrambled not an indecipherable stream of bits for transmission.

Debit – The withdrawal of funds from an account.

DFI – Depository Financial Institution.

Direct Debit – A method of ACH collection used where the debtor gives authorization to debit their account upon the receipt of an entry issued by a creditor.


E

eCheck – An electronic version or representation of a paper check. The account holder writes an check using a computer or other type of electronic device and transmits the check to the payee electronically.

Electronic Funds Transfer (EFT) – A term used whenever money is moved without the use of a check or draft.

Electronic Funds Transfer Act – he United States federal law that governs the use and administration of electronic funds transfer services.

Electronic Payment – An alternative to cash or paper checks for paying bills. Consumers can use computers, phones, or ATMs to send electronic transactions to their banks or bill payment providers to withdraw funds from their accounts and pay merchants.

M

Merchant Account – A financial institution or bank account that is used by a merchant specifically for the purpose of collecting payment transactions.

Merchant Account Provider – A financial institution or bank that provides a financial account to a merchant for the purpose of collecting proceeds from consumer bank account or payment transactions.

MIRC Reader – An optical or magnetic device used by a merchant, which reads the MICR numbers encoded along the bottom of the check.


N

NACHA (Electronic Payments Association) – Association that develops and maintains the NACHA Operating Rules and oversees all ACH activities and procedures.

NACHA Format – The accepted and warranted ACH payment record format specifications provided by NACHA Operating Rules and Guidelines.

NSF (Non-Sufficient Funds) – ACH return that indicates a receiver’s bank account does not have the sufficient funds to cover a transaction.


O

ODFI (Originating Depository Financial Institution) – Financial institution that receives payment instructions from the merchant or originator and forwards payment entries to the correct ACH operator.

Originator – An organization or company that produces an ACH file and delivers it to an ODFI for introduction into the Automated Clearing House Network.


P

Payment Gateway – A dedicated portal to enter and submit payment transactions for processing to the ACH Network and the participating banks.

Pre-notification (Pre-note) – A zero dollar entry that must be sent through the ACH Network at least six calendar days prior to any live entries affecting an account at a RDFI.


R

Receiver – Term used when referring to the clearing of ACH transaction to describe the individual or company that has authorized an originator to initiate a refund or charge transaction to their bank account.

RDFI (Receiving Depository Financial Institution) – The institution that receives the ACH transaction for posting to receiver’s account.

RVD – Risk Verification Database (rVd) Plus combines the historical power of ACHQ’s Risk Verification Database with multiple banking, retail, and billing sources to predict the current status of the bank account.

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